American stocks might go from laggards to leaders as the dollar mounts a comeback, according to Steve Cortes, Founder of Veracruz Realtime Market Research. Cortes joins the panel for this conversation. Following is a summary of what was said.
What’s your thinking?
After five years of underperformance I think the Untied States has become a value asset, explains Cortes. Two major financial burden have been weighing on the Untied States; 1) self-financing the war on terror and 2) the US has been the lone provider of liquidity to the world.
Both of those factors are starting to dissipate. Spending on the war is at least starting to plateau and the Fed has indicated that rate cuts are mostly over. That weighs in favor of the United States. I think you can be long the dollar, he concludes.
Any stock trades on your thesis?
Look at more domestically oriented companies to outperform the mega-exporters. I’m not interested in McDonald’s, or Coke.
Instead, look toward Wal-Mart and UPS and pair them on the short side with the ETF’s of the foreign countries such as iShares MSCI Germany Index Fund or the iShares MSCI Spain Index.
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